Growth Needed to Offset GOP's Tax Bill Heading to be Out of Reach

3/6/2018

American Customer Satisfaction Index

The economic growth needed to offset last year's GOP tax bill could be out of reach as customer satisfaction stalled toward the end of 2017. The American Customer Satisfaction Index (ACSI®) finds that aggregate customer satisfaction stood still at 76.7 (on a 0-100 scale) for the third quarter in a row.

While that score is just 0.4 percent below the all-time high in Q1 2017, it's not a good omen for the Trump Administration's goal of 3 percent annual growth in gross domestic product (GDP).

Improving customer satisfaction creates additional consumer demand, which in turn results in above-average consumer spending. Right now, we're just not seeing that, and it raises questions about the health of the economy.

After rising quickly each quarter in 2016, the national ACSI score hit its all-time peak in Q1 2017 before dropping in Q2 and holding steady ever since.

That poses problems for the goal of 3 percent annual GDP growth, which has only happened seven times in the past 25 years, and was accompanied by consumer spending growth at an average rate of 4.2 percent.

The new Federal Reserve Chairman, Jerome Powell, painted an optimistic picture of the economy over the next two years in his first public appearance, but without a rise in customer satisfaction to fuel demand and spending, 3 percent annual growth could be hard to reach.

The national ACSI score is a reflection of the average American consumer's satisfaction across all sectors and industries over a 12-month period.